Freddie Mac roiled the mortgage-backed bond market Wednesday with a plan to repurchase $60 billion of severely delinquent loans from its securitized pools.
The repurchases will cover all securitized Freddie loans that are 120 days or more past due. It was bad news for investors who had bought Freddie paper for more than face value. But in the long term, the move could improve the prices that Freddie gets for new issues. It could even reverse the longstanding relationship in which Freddie bonds fetched slightly lower prices than Fannie Mae's.